Tags: Dollar | Bears | Marauding | Hordes | us | economy | sell

FT: Bets Against the Dollar Soar by the Billions

Tuesday, 08 Mar 2011 08:19 AM

Gaping U.S. deficits, skyrocketing oil prices and a recovering euro all mean one thing for foreign-exchange traders these days: ditch the greenback, and ditch it for the long term.

Figures from the Chicago Mercantile Exchange indicate that short dollar positions surged by more than 40 percent to 281,088 contracts on March 1 from the week ending February 22.

In other words, the value of bets against the dollar are rising by the billions on a weekly basis.

dollars200-(1).jpg
Investors bet against dollar.
Meanwhile, expectations for rate hikes in Europe to fight inflation there are chasing many of those investors to the euro.

"Dollar bears have become a marauding horde," David Watt, an analyst at RBC Capital Markets, tells the Financial Times.

Others agree.

"We may be seeing a turn in the longer-term outlook for the dollar – for the worse," says Kit Juckes, head of FX strategy at Société Générale.

While concerns that inflation is lurking in United States don't appear to be strong enough to warrant higher interest rates here, they are in Europe.

European Central Bank (ECB) President Jean-Claude Trichet has said interest-rate hikes are possible, adding that "strong vigilance is warranted," according to Bloomberg.

Market watchers are convinced higher borrowing costs are around the corner.

"The ECB will hike rates by 25 basis points in April and I wouldn't be surprised to see another increase in September or October," says Natascha Gewaltig, chief European economist at Action Economics in London.

"Inflation expectations are picking up, that’s a clear signal for rate setters."

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Gaping U.S. deficits, skyrocketing oil prices and a recovering euro all mean one thing for foreign-exchange traders these days: ditch the greenback, and ditch it for the long term. Figures from the Chicago Mercantile Exchange indicate that short dollar positions surged by...
Dollar,Bears,Marauding,Hordes,us,economy,sell,short
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2011-19-08
 

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